Adani Group stocks faced a historic plunge, dropping by up to 20% on Thursday, after US authorities indicted Gautam Adani and seven others in a massive bribery and fraud scheme. The indictment, filed by the US Securities and Exchange Commission (SEC), accuses Adani of engaging in corrupt practices to secure lucrative solar energy contracts in India, significantly affecting investor confidence in the group’s companies.
Steep Decline in Adani Group Stocks
The stock market reacted sharply to the allegations, with several Adani Group companies suffering heavy losses. Among the hardest hit were:
- Adani Energy Solutions, which experienced a staggering 20% drop in its share price.
- Adani Green Energy, with an 18% decline.
- Other major entities, including Adani Enterprises, Adani Ports, Adani Total Gas, NDTV, Ambuja Cements, and ACC, witnessed a fall of over 10%.
This sharp decline adds to the challenges faced by the group, which had already been under scrutiny after allegations from the US-based short-seller Hindenburg Research earlier this year.
Details of the Allegations
The SEC indictment alleges that Gautam Adani and his associates, including his nephew Sagar Adani and Adani Green Energy executives, conspired to defraud US investors and financial institutions by providing misleading information. The group is also accused of paying substantial bribes to Indian officials to secure favorable contracts in the renewable energy sector.
According to court documents, the alleged scheme involved approximately $265 million in bribes paid over several years, with the group expecting to generate $2 billion in profits over two decades.
Impact on Adani’s Global Ventures
The fallout from these charges is not limited to the Indian stock market. Adani Group’s dollar-denominated bonds also faced significant declines in Asian trading sessions:
- Adani Ports and Special Economic Zone bonds fell by 3-5 cents, marking their steepest drop since February 2023.
- Adani Green Energy withdrew a proposal to raise $600 million through US-dollar bonds, citing “recent developments” as the primary reason.
This marks another setback for the conglomerate, which has been attempting to rebuild its global reputation after being accused earlier this year of stock price manipulation and fraud.
Context of the Allegations
The US indictment states that Adani and his associates engaged in fraudulent practices to attract investments from American investors and international financial institutions. The scheme allegedly involved falsifying financial records and misleading investors about the profitability and sustainability of Adani’s green energy initiatives.
In an unexpected twist, the timing of these allegations coincided with Adani announcing a major green energy investment and extending congratulations to US President-elect Donald Trump on his election victory. Adani’s public message of support for Trump’s pro-business policies drew attention, as the Trump administration had promised to reduce regulations for energy companies.
Reactions and Investor Sentiment
The market downturn reflects growing concerns among investors about the stability and integrity of the Adani Group. Analysts believe this could have long-term implications for the group’s ability to secure international funding, especially in the renewable energy sector.
The allegations come at a critical time for Adani, as the group has been expanding aggressively into infrastructure and renewable energy projects. However, these charges are expected to raise questions about the transparency and governance standards within the conglomerate.
Adani Group’s Response
As of now, Adani Group has not issued a detailed response to the allegations. However, the company is expected to challenge the charges in court and attempt to reassure investors of its commitment to ethical practices and transparency.
What’s Next for Adani Group?
The immediate priority for Adani Group will be damage control, both in terms of legal defense and investor relations. Experts believe that the ongoing legal battle could have far-reaching consequences for the group’s global reputation and financial stability.
For now, the group faces the daunting task of regaining investor trust amidst mounting scrutiny from regulatory bodies worldwide.
Harvkat News
